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Wintrust Closes Assets Acquisition of American Enterprise

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Wintrust Financial Corporation (WTFC - Free Report) recently completed the acquisition of certain assets and the assumption of certain liabilities of American Enterprise Bank through its subsidiary — Northbrook Bank & Trust Company.

The deal was announced in July 2018. The company does not expect it to have a material effect on the current or next year’s earnings.

American Enterprise Bank has offices in Buffalo Grove, Highland Park and Schaumburg, IL, with about $128 million in loans and nearly $152 million in deposits as of November 2018. Almost all of these have been acquired by Wintrust. 

President and CEO of Wintrust, Edward J. Wehmer, said, “This expands and complements our market presence in the north and northwest suburbs of Chicago.”

Terms of the Deal

Wintrust has taken over assets, which include nearly all of American Enterprise’s loans, investment securities, certain cash balances held at the Federal Reserve Bank and specified OREO properties.

Further, the liabilities assumed include all customer deposits and Federal Home Loan Bank advances. 

A premium of 4.2% on the deposit balances assumed has been paid by the Wintrust while the remaining assets and liabilities were considered at fair market value. Notably, real property owned by the acquired company is not included in the terms of the transaction.

Prior Acquisitions by Wintrust in 2018

In August 2018, Wintrust announced the completion of Chicago Shore Corporation, the parent company of Delaware Place Bank. Per the terms, Delaware Place Bank was merged into Wintrust’s wholly-owned banking subsidiary, Wintrust Bank. Though the company does not expect this transaction to have a meaningful impact on its 2018 earnings, it strengthened its foothold in Chicago.

Wintrust acquired certain assets and liabilities of iFreedom Direct Corporation DBA Veterans First Mortgage in January 2018. The deal is expected to be slightly accretive to the company’s earnings per share in 2018. Also, the acquisition has provided Wintrust Mortgage with Veterans First Mortgage’s servicing rights on nearly 8,300 loans, which total $1.4 billion in principal balance.

Both the acquisitions support Wintrust’s growth plan in the United States. The company’s involvement in such strategic deals is indicative of its strong balance sheet position.

Shares of Wintrust have lost 12.8% so far this year compared with 6% decline recorded by the industry.

Currently, Wintrust carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the finance space are Old Second Bancorp (OSBC - Free Report) , TD Ameritrade Holding Corporation’s (AMTD - Free Report) and Peoples Bancorp (PEBO - Free Report) . All these stocks carry a Zacks Rank of 2 (Buy).

Earnings estimates for Old Second have been revised 2.6% upward for the current year, over the past 60 days. Its share price has increased 31.2% over the past two years.

TD Ameritrade’s Zacks Consensus Estimate for current-year earnings has been revised 2.1% upward over the past 60 days. Also, the company’s shares have risen nearly 16% in the past two years.

Peoples Bancorp’s Zacks Consensus Estimate for current-year earnings has remained stable in the past 60 days. Over the past two years, its share price has increased nearly 4.9%.

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